6
Nov
2018
Monthly updates, News, Vietnam
MONTHLY COMMENT VIETNAM – OCTOBER 2018

THE FUND:

Vinfast, Vietnam’s first domestic automobile brand is building a manufacturing complex with a total capacity of 500,000 unit per year, making it, on completion, one of the largest in South East Asia.

The fund lost 9.1% in October compared to a 7.7% decline in the benchmark index (FTSE Vietnam). Our overweight in Financials (HDBank, Saigon Securities, VNDirect Securities), Consumer Discretionary (Danang Rubber, TNG Investment, Phu Nhuan Jewelry), Materials (Hoa Sen Group), and Information Technology (FPT Corporation) contributed to the relative underperformance of the fund. The sharp correction in international oil prices and poor quarter 3 results also had a negative impact on the stock prices of PetroVietnam Drilling and Hoa Sen Group, which are our off-benchmark bets. On the other hand, our underweights in Real Estate (Vincom Retail, Vinhomes) and Consumer Staples (Masan Group, Vinamilk) were positive contributors to the relative performance. No major changes were made to the fund during October. (all changes in SEK)

THE MARKET:

Vietnam’s market witnessed a strong correction in October, putting an end to the two-month positive performance. Uncertainty in the global economic landscape and weaker regional markets led investors to reduce their equity exposure. Brokers curtailed margin lending in response to the declining market, resulting in further pressure in the market. Foreigners remained net buyers during the month to the tune of USD 397m. Excluding treasury shares purchase of Masan by SK group Korea, foreign investors net sold USD 70m in the market. The VN Index closed out October losing 7.7% (SEK) compared to 5.7% decline in MSCI Emerging Markets and 0.9% decline in MSCI Frontier Markets xGCC. Earnings result season was subdued with less than expected announcements by Hoa Sen Group, Vinamilk, VPBank, Sabeco, etc. disappointing the market. Energy stocks corrected considerably following global crude prices. Vietnam seems to be tracking global markets and US-China trade war. In the absence of catalyst, we expect the market to remain lackluster until year-end. Valuations, however, have become more attractive where the market is trading at a forward PE of 13x.

Macroeconomic indicators paint a promising picture. YTD disbursed FDI increased by 6.3% to a record high of USD 15.1bn. 10M18 exports jumped 14.2% to USD 200bn, posting a surplus of USD 6.4bn. PMI in October improved to 53.9-points, indicating a higher pace of improvement in manufacturing. Despite increasing fuel prices, inflation had a marginal increase of 3.9% year-on-year and 0.33% month-on-month.

 
DISCLAIMER:
Capital invested in a fund may either increase or decrease in value and it is not certain that you will be able to recover all of your investment. Historical return is no guarantee of future return. The Full Prospectus, KIID etc. are available on our homepage. You can also contact us to receive the documents free of charge. Please contact us if you require any further information: +46 8-5511 4570.


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